| New York Court of Chancery | Sep 15, 1869
The present application is that William A. Hall may be discharged from his suretyship in the injunction bond, or that the bond may be canceled and a new bond taken, as may be in accordance with the powers and practice of the Court; that the deposition of Hall already taken be suppressed, and the witness re-examined upon the same interrogatories and cross interrogatories.
The defendants object, first, the want of power in the Court to discharge this surety, since that would impair obligation of a contract within the prohibition of the Federal Constitution.
Doubtless, the injunction bond is a contract, what is termed a contract executed ; and out of it there do spring obligations and rights, which, whatever they may be, and with such qualifications, if any, as attach to them, rest upon contract, and are within the protection of this clause of the Constitution. Were this cause to proceed to a hearing, and the injunction to be dissolved, the bond remaining in force and being then delivered to the defendant, as it would be, under the order of this Court, then the right of defendants to redress upon it, and the obligation of the surety to respond having become vested and indefeasible, would be beyond the reach of any power, legislative or judicial.
I am of opinion that while this cause is pending, the bond is under the control of the Court, and that the rights
This was not a bond executed and delivered by one party to the other for a consideration received, the ordinary case vesting immediately and subject to no control or contingency as to the rights and obligations imparted by it. It is a security taken by the Court without any privity of the defendants, upon no consideration passing from them ; — it is what they could not have required, and what no law or statute-required, but was taken by the Court sua sponte to serve the justice of the cause, as that shall appear to its own judgment, — when taken it remains, according to uniform practice, in the custody of the Court, not delivered to the defendants ; nor could the defendants obtain possession of it, but under the order of the Court at the termination of the suit.
The result is that this bond, though taken in the name of the defendants, and intended for their benefit in a certain contingency, is not yet their property. It has not been delivered to them, nor is there any ground upon which, supposing the defendants stood in a like relation to a private party, as they now do to this Court, they could compel a delivery, or assert an equity to the benefit of it without a delivery. It must abide the disposal of the Court until the cause is determined.
I have considered with some anxiety what objection there might be to this view of the present condition of the bond, and can find none. In the first place, it violates no rule of law as to the effect of a sealed instrument. A deed may be signed and sealed and delivered conditionally or in a qualified manner, so as to pass from the control of the grantor or obligor, and yet not vest an immediate and indefeasible title or right in the grantee or obligee. Such is
Again, no right of the defendants is infringed by holding the bond under the control of the Court pending the cause. For as yet, no right of defendants has attached to the instrument. Being taken in the discretion of the Court it remains subject to that discretion until, by delivery, a legal right to the instrument is created.
Again,there is no cause for sensitiveness, that ultimate justice to the defendants is left at risk through the Courts retaining control of the bond. The same sound discretion and sense of justice to which our laws have confided the taking of any bond at all, may as well be trusted to hold and dispose of it so as to secure the just rights of parties ; while, on the other hand, the exercise of such a control until the cause is determined, may be often convenient for the ready correction of mistakes to which the bonds, taken as they are out of Court, and not under .the direct supervision of the Chancellor, are liable, and sometimes a change or substitution may become necessary to justice, as in the present case, where the surety is found to be a material witness. The disqualification of the witness may result from no fault of the party who would be affected by the loss of his testimony. The' materiality of his testimony might arise, or it might be discovered after he has become surety. A party cannot, upon principle, be held to be apprized of all the testimony which will be
The decision in Maryland, Arty and wife vs. Grove, 21 Md. Repts., 456, I have considered with great respect, but am obliged to dissent from it. I do so with the less hesitation because the question in that case was a subordinate one, and concerned only a small interest, viz : one item of credit to the amount of $68 in an account; and the remarks of the Court do not show that much consideration was given to it.
But it is further objected that, supposing the Court have power to discharge the surety, it is now too late to allow his re-examination, in as much as his deposition already taken as well as the testimony at large, has been
If the witness shall reiterate his former testimony, the case' will stand upon precisely the same proof as if he had been originally competent, and the deposition first taken were read at the hearing. If he varies from his first statements the defendants have the advantage of the self-contradiction. Statements of any new matter will not be permitted to be introduced.
The rule is, that the re-examination of a witness is against the ordinary practice, but is allowed by special order upon grounds satisfactory to the Court, as in the case of clearly accidental mistake on the part of a witness, or of the examiner. Kingston vs. Tappan, 1 Johns. Ch., 368 ; Denton vs. Jackson, Ib., 526 ; 1 Smith's Ch. Pr., 358 note (a) ; or where the depositions already taken have been suppressed for some irregularity which the Court is satisfied was accidental and unintentional. See, at large, 2 Dan. Ch. Pr., 1150-1156, and 1 Smith's, Ch. Pr., 395. In Healey vs. Jaggar, 3 Simons, 494, a plaintiff having by mistake omitted to file a replication before he examined his witnesses, leave was given to him, notwithstanding publication had passed, to re-examine his witnesses on the interrogatories already filed, but not to examine any new witnesses. There are cases in which a re-examination after publication passed, has been allowed for the purpose of rendering a witness competent. Callow vs. Mince, 2 Vernon, 472, and Sandford vs. Paul, 3 Bro. Ch. Rep., (370,) are direct decisions on the point, the latter
Certainly these applications should be entertained with great jealousy and circumspection ; but the present application presents all those features which the Courts, in their most cautious exercise of this discretion, have required. The evidence of this witness is material to the issue, and its admission will be to the furtherance of justice in the cause: — the taking of it without the previous removal of the disqualification of the witness was through inadvertence, and that of a kind not involving neglect, being such as all counsel are liable to : the application is made in good faith — and to grant it involves no delay of the cause nor surprise upon the defendants, nor any other prejudice than the effect which the testimony itself may have at the hearing, which, of course, is a consequence not to be considered.
The cause came on to a hearing at an adjourned September Term, 1869.
The Chancellor :—
The grounds of defense taken in argument were twofold ; one that the evidence was not competent in point of law to establish the alleged trust, the other, that it was insufficient to prove the trust as a matter of fact. Let us take up these objections in order.
The argument of the first objection, i. e., the competency of the evidence, raised three questions of law.
First, was the broad question, treated in the argument as yet unsettled, whether, in this State, a parol trust of lands can be set up at all. If it cannot be, then the case is ended upon the threshold.
My great respect for even the doubts of the learned and experienced counsel for the defendant, and a desire not to leave, in any degree unsettled, in this Court, a question of so much importance, has led me to examine it thoroughly with this result.
The distinction put by the Ld. Chief Baron, as one likely to harmonize the earlier cases was, that where the mode of conveying the legal estate was such as might be an act in pais or by parol, the uses or trusts of the legal estate might be declared by parol; but where, as in the case of a few only of the old common law assurances, the conveyance of the legal estate could only be by writing, the uses of such conveyance must also be -declared in writing.
I have examined the passage from Gilbert, and the cases cited by him, and all other authorities of that period which are accessible. Quite a laborious investigation of the subject has led to the conclusion that, under the old modes of conveyancing which were in use prior to 29 Car. II, excepting only two of them, the uses of the land conveyed, (or the trusts of the same, after trusts had succeeded to the ancient use under the Statute of Henry VIII,) might be declared by parol. This was true as to lands when conveyed in the earliest times by feoffment and by fine levied of the freehold, and, also, as to lands conveyed by that form of assurance which superseded these, and which now prevails, viz; — the bargain and sale.
Nor does it appear that the seventh section of the English Statute of Frauds, or any corresponding rule of
This conclusion has been reached in other States wherein the seventh section of the Statute of Frauds has not been re-enacted, or had not been when the question was raised. It will be instructive to see how the subject has been treated in these States.
In a case in Virginia, Bank of the U. S. vs. Carrington et al., 7 Leigh, 576, the question respected the admission of parol evidence to establish a trust resulting to one who had paid the purchase money, another being named as grantee in the deed. The whole subject of parol trusts, express, as well as resulting, and the effect of the omission, in that State, of the seventh section of the English Statute of Frauds, was examined, the several judges who expressed opinions, all concurring in the validity of parol trusts, in the absence of the statutory prohibition. Tucker, President, says: “Before that “Statute, declarations of trust might have been made by “parol, and as our Statute contains no provision on the “ subject, it is possible that a verbal declaration of trust, “if clearly proved, might be sustained. I imagine it has “ not infrequently occurred in Virginia that husband and “ wife have conveyed to a third person, with intent that “ he should reconvey to the husband, but without any “written declaration of trust. A case of this kind has “recently occurred and is under advisement. Yet I have “ never heard it questioned that it might be sustained, “ though not in writing, and though it be not a resulting “trust. So with respect to deeds, absolute on their face, “ when the real transaction was a mortgage. Whatever
In Ohio, the question arose in Fleming vs. Donahoe, 5 Ohio, 255. In that State there was no Statute against parol trusts of lands before 1810. In 1808, lands of which one Fleming held the equitable title, were conveyed under his direction to his daughter Mary, by a deed, absolute in form. The bill was filed by Fleming, heir-at-law, against Mary’s representatives, for a re-conveyance, upon the ground that the conveyance to Mary was upon certain trusts for the benefit of herself and her father, which had expired upon the death of both. The answer denied the trust, and testimony was taken. The Court say, touching the absence of any Statute of Frauds, at the date of the deed affecting the proof of trusts, “The Statute of “Frauds in Ohio was passed in 1810. At that time there “was no law in Ohio prohibiting parol contracts concern“ing lands, or the creation of trusts in them.”
In North Carolina, where the English Statute has never been re-enacted, the validity of parol trusts was first questioned in Foy vs. Foy, 2 Hayw. 296, in 1801. Thomas Foy, a brother of both the parties, held a tract of land, together with the defendant, Foy, the legal title being in the defendant Foy, but Thomas being equitably entitled to one-half. Thomas dying intestate, as to this land, the dispute concerned the succession to his equitable moiety, the plaintiff, as one brother and heir-at-law, claiming a share of the moiety, and the defendant, the other brother, claiming to retain the whole of Thomas’ moiety under certain parol declarations to that effect made by Thomas in his lifetime. The Court, upon objection being taken that the moiety of Thomas “could not pass “to defendant by Thomas’ mere parol declarations,” took
It should be here remarked, that in the long series of cases in North Carolina since Foy vs. Foy, in which parol trusts of lands conveyed by deed, absolute in form, have been so much considered, it will be found that the validity of such trusts has not been overruled, but the question has been, what species of evidence the Court should require to establish a parol trust against a deed, absolute in form, whether verbal admissions of the trust by the grantee are alone sufficient.
That is a question yet to be considered in this case.
In Tennessee, where the English Statute has.not been re-enacted, it has been held to be well established that the Court of Chancery has jurisdiction “ to enforce the specific excution of a trust, declared by parol, in relation to “real property, if plain and unambiguous in its terms and established by clear and satisfactory evidence. ” Haywood vs. Ensley, 8 Hump., 466 ; 6, Hump. 99; 1 Yerg. 100.
We come now to the second question raised in the argument, touching the competency of complainant’s evidence to establish the trust — viz : whether even if, in the absence of a prohibitory statute, parol trusts generally are admissible, one can be set up (as in this case is attempted) against the grantee in a deed, absolute upon its face, without an allegation and proof that a declaration of the trust was intended to be inserted in the deed, and was omitted through fraud or mistake.
The learned counsel for the defendant did not strongly press the argument so far as to exclude parol trusts alto
The question, as it applies to this case, admits of two answers.
1. According to the allegations of the bill and the admissions of the answer, such were the relations of these parties, and the circumstances under which the deed was made, that to set up the form of the deed as conclusive against prqof of the real transaction, would be a fraud on the part of Livingston. The case is this upon both bill and answer; Hall, an illiterate, confiding young man, unable to read or write, with not the least knowledge of legal forms or instruments, wholly incompetent to manage his own affairs, becoming involved, and likely to lose his property, comes, somehow or other, it matters not to this point, how, under the advice and management of Livingston, who is his father-in-law, a man competent to deal with the business in hand, and to whom it is wholly confided by Hall. In all essential respects, Livingston assumed the relation or office of a guardian. The deeds are prepared by a scrivener whom he employs, under his exclusive direction, are taken to Hall’s house, read over in the usual way, without explanation, either asked or given, and signed by him alone, his wifé being then sick. It does not appear that the papers were left with Hall until his wife should be able to execute them ; the presumption is that they remained in the same custody, the scrivener’s, and were kept by him until some three weeks after, when Hall and his wife went to Milford, and she
Now, upon these undisputed facts, I take it to be clear upon principles of equity, so fundamental and settled as to need no reference to authorities, that Livingston, assuming the sole superintendence of the business for an ignorant and confiding son-in-law, was bound to see that the papers were such as would effectuate the intention of the parties, whatever that purpose might be. That, under such circumstances, to set up the absolute fo.rm of the deeds against evidence of his real transaction, would be contrary to good faith, and afford extreme facility for fraud, and, upon these two considerations, cannot be permitted in a court of equity. It matters not however innocently an omission in the deeds, supposing there was one, may have occurred in the first instance. Nor can it be that Livingston’s duty in the premises was at all discharged by a mere formal reading of the papers in Hall’s presence, as the usual preliminary to their execution ; for it is not a natural or fair presumption that Hall would, from such a reading, comprehend the technical operation of the papers, but, rather, that he would unreflectingly accept them as answering the purpose, distrustful of'his own ignorance, and confiding in his father-in-law. Touching his knowledge of such a transaction, so managed, nothing should be presumed.
Upon this ground, therefore, I must hold parol evidence admissible to shew the real object of these deeds. But,
2. In the second place a patient investigation of the whole subject leads to the conclusion that independently
It is certainly true, that a deed cannot be contradicted, nor can its legal operation be varied by extrinsic evidence, no more by written than by parol — by nothing short of an instrument of like solemnity,/, e., an instrument under seal. This is a rule as binding in equity as at law ; for, though a court of equity may reform the writing, when, through fraud or mistake, its terms are not what they were intended tobe, yet, so long as the instrument stands as the deed of the parties, it can no more be contradicted, or its legal operation impaired, in the one Court, than in the other.
But this falls short of this case. The effort of the complainant is not to contradict or to impair the legal operation of the deed to Livingston, but rather to charge Livingston, as the legal owner under the deed,with a trust arising out of an agreement dehors the deed, touching its object and the uses of the estate conveyed.
There is a well recognized distinction between contradicting a deed or impairing its legal operation, and raising out of the transaction an equity dehors the deed, binding the grantee’s conscience to hold the land for the real purposes of the conveyance, and not according to its legal operation, when the latter use of it would, under the circumstances, work fraud. Such an equity is held to be independent of the deed, and not excluded by it as a mere conveyance of the legal estate, unless there be in it some terms or implication to that effect. To support such an equity, parol evidence is admissible, not as contradicting the deed, but as explanatory of the transactions out of
Now, while it is certain that to charge the grantee, under an ordinary deed, with a trust, upon extrinsic evidence, especially upon parol evidence, is a jurisdiction to be exercised with caution, and only under cogent proof, such as the conscience of the Court cannot resist; still the jurisdiction is unquestionable. So far has the distinction been carried, between contradicting a deed and enforcing against the grantee equities springing out of the transaction, that, as is now generally held, a deed absolute on its face may, in a court of equity, upon parol evidence of the real transaction, be enforced as a mortgage or security for money, if the circumstances make sufficient equity to have it so treated, and' that, too, although it may not appear that a defeasance, intended to be inserted, was omitted through fraud or mistake. 1 Powell on Mortg., 151 a ; 1 Hilliard on Mortg., 42 &c. ; Hughes vs. Edwards, 9 Wheat., 494; Morris vs. Nixon's Ex'rs, 1 How., 121 ; Strong vs. Stewart, 4 Johns. Ch. R., 167; Slee vs. Manhattan Co., 1 Paige, 48, and 77 note; Clark vs. Henry, 2 Cow., 324; Van Buren vs. Olmstead, 5 Paige, 9.
Whether in this State,an absolute deed may,upon parol evidence and without any allegation of fraud or mistake in the omission of a defeasance, be converted into a mortgage, isa question not yet decided. I forbear to express any opinion upon it. But there can be no doubt that the gra ntee of
Thus the Statute itself in allowing a trust, dehors the deed, to be raised by extrinsic evidence, provided it be in writing, plainly demonstrates that both before and under the Statute to charge a grantee with such a trust, does not contradict the deed ; and, plainly, if the raising of a trust under the Statute by means of any extrinsic, written evidence, does not contradict the deed, no more can the raising of such a trust by parol evidence, where the Statute is not in force, be held to contradict the deed. And, accordingly, in all those States where the Statute had not been re-enacted (except perhaps Connecticut,) the grantee under a deed has been held chargeable with a trust upon extrinsic evidence, whether written or parol, and without any restriction as to the kind of evidence admitted, except that, in North Carolina, a trust when raised by parol, must be by proof of facts and circumstances, excluding mere verbal declarations of the party to be charged. In one of these States, Ohio, there is a decision very direct to the point and well considered. Fleming vs. Donahoe, 5 Ohio, 255, before cited. The facts of that case have been already stated. It was a bill like the present one, for the re-conveyance of lands which had been passed by a deed absolute in form, upon the ground that the conveyance had been, in fact, made upon certain trusts, to prove which trusts, parol testimony was offered. The Statute of Frauds had not then been enacted in Ohio. The Court say, “ can “a trust in lands be created by parol, and proven by “parol under a conveyance prima facie, absolute? It is “conceded as a general principle that a deed or written “ contract cannot be varied by parol. But is this a case of “ that kind ? The object of the conveyance is not intended “to be expressed in the deed. The grant and considera
And so in Pennsylvania, in Murphy vs. Hubert, 7 Pa. St., 420, before cited, the Court, by C. J. Gibson, having first decided that parol trusts were not then prohibited by Statute in that State, held that oral declarations of the grantee in an absolute deed, touching its purposes, were held admissible evidence to charge her with a trust. In Virginia, as we have seen in the extract from President Tucker’s opinion in the case from 7 Leigh, 576, it was treated as settled law that, inasmuch as the Statute of Frauds was not in force there, a trust for a re-conveyance by the grantee in an absolute deed might be shewn by parol, or an absolute deed might be shewn to have been given as a mortgage.
The only authorities, not agreeing with this course of decisions, are the cases cited from North Carolina and an early case in Connecticut. The North Carolina cases are, Kelly vs. Bryan, 6 Iredell's Equity, 283; Sowell vs. Barrett, Busbee's Equity 50; and three cases reported consecutively in 1 Jones' Equity, 184, 193, 195. The rule as announced by Pearson J., delivering the opinion of the Court in Kelley vs. Bryan and Sowell vs. Barrett, and by Battle J., in the cases from 1 Jones, treats parol evidence of any kind, whether consisting of declarations or of acts and transactions of the parties, as being contradictory to the deed,and therefore inadmissible to convert the grantee into a trustee or mortgagee, unless the bill alleged that the declaration of trust, or clause of redemption was omitted from the deed “through ignorance, fraud, mistake or undué advantage.” Busbee’s Eq., 194-5.
So, in the later North Carolina cases, the grantee under an absolute deed has been held upon parol evidence to be either a trustee or mortgagee, although no fraud or mistake in the form of the deed was alleged. Such were Howlett vs. Thompson, 1 Iredell's Equity, 369; Kemp vs. Earp, 7 Iredell’s Equity, 167. The rule to be gathered from current of North Carolina decisions on this subject is, that the form of the instrument is not conclusive with respect to the uses or objects for which the land is to be held— that, although, made absolute on its face, with knowledge of the parties, without fraud or mistake, still the grantee maybe held to be a trustee or mortgagee upon parol evidence ; with this qualification, however, that the evidence must not be mere declarations of the parties, but it must shew facts and circumstances inconsistent with the idea of a purchase. I cannot but think, with much deference to the two learned Judges who delivered the opinion, in Kelly vs. Bryan, and the cases immediately following that case, that, in their expression of the rule, this point now before us was not distinctly considered. For although in all those cases there was no allegation in the bills filed of any fraud or mistake, still the Court entered fully into consideration of the parol evidence adduced, and rested their decisions upon the insufficiency of the evidence, and not upon the absence of fraud or mistake in the form of the deed, which, under the rule as stated, should have prevented any further investigation.
Besides the opinions delivered by Judges Pearson and Battle before cited, only one other instance is found in which parol evidence of a trust has been held to be contradictory to an absolute deed, and relief denied because fraud or mistake in form of the deed was not alleged. That is an early case in Connecticut, Dean vs. Dean, 6 Conn.
<1* * * The object of the bill is to effectuate this “ parol agreement or, in other words, to convert an estate “absolute in the grantee, into a mere legal right, and to “ obtain a decree that the whole beneficial itnerest shall be “vested in the grantor against his clear deed for a valuable “consideration, acknowledged to have been received, con- “ veying the entire estate to the grantee. To do this “would be to contradict the rules of the common law in “ relation to deeds or other instruments in writing, and, “also, the Statute of Frauds and Perjuries.”
This decision holds a deed unimpeached for fraud to be absolutely conclusive, as well of the equitable as of the legal estate, and excludes any trust not declared in the deed itself. It even treats, as of no effect, the agreement between the parties, that a declaration of the trust should be executed and the laches of the grantee under the deed in not executing it ; which was clearly relievable upon the ground of fraud. That must be a narrow system of equity jurisprudence which this case represents.
The conclusion upon this point is, that, in our State, a court of equity may establish a parol trust of lands against a grantee under an ordinary deed of bargain and sale, the terms of which neither declare nor exclude a trust ; and this, although no fraud or mistake in the frame or phraseology of the deed be alleged.
No such rule seems to be of force in this State, — none prescribed by statute, — none as a part of the general law of evidence, — none as yet adopted by our Courts as specially applicable to this subject. I am not able, after much reflection, to adopt it. Admissions of a party, though a species of evidence are certainly liable to fraud and mistake, —evidence which should be reviewed cautiously and tested by its consistency with collateral facts, may, nevertheless, under some circumstances, become proof conclusive upon the conscience of the Court; — as where the admissions are proved by a number of independent and unimpeached witnesses, are made in clear and unequivocal terms, and have respect to specific transactions of the party himself about which he could not be mistaken, and as to which he speaks against his interest. Admissions, so proved, will rarely, if ever, be found to be out of harmony with the real transactions between the parties relative to the subject-matter, although there may be, in some particulars,
The North Carolina rule rests upon the assumed danger of admitting parol declarations, alone, to engraft trusts of land upon deeds absolute in form. But such danger is more apparent than real. In no case can the title of the grantee, under a deed absolute, be drawn into question collaterally. A trust can be asserted against him only by a bill in equity for the specific purpose; all who can be in any way interested are made parties. Each step is taken deliberately and with notice ; ample opportunity is afforded to guard against surprise or perjury ; the Court has power to protect innocent third parties who may have acted upon the faith of the deed as it stood, and throughout the whole proceedings the grantee has the protection of the strong presumption in his favor arising from the face of the instrument. Much more serious, on the other hand, would be the danger of giving facility to fraud by artificial rules, restricting the means of inquiry into the real transaction which a deed is intended to effectuate. For, generally, deeds are, and the present is a signal instance of it, executed without attention to, or ability to understand, their technical phraseology and precise legal operation; while, at the same time, the
Taking with us this test, we now approach the evidence in the cause, the weight of which covers the second general head of the discussion.
Having first examined and analyzed the evidence on both sides with the utmost thoroughness, considered each circumstance in detail, and then carried it, as a whole, upon my mind for several months, viewing it in every conceivable aspect, and testing, by time, the impressions made, I find it impossible to resist the conviction, and it is one free from doubt, that these conveyances were made in trust, that Livingston should, out of the rents and the proceeds of wood and timber to be cut and sold, pay Hall’s debts, and then re-convey. The existence of this trust is proved by Livingston’s admissions,frequent, unequivocal, and perfectly well established by proof. With respect to the acts and transactions of these parties, attending and following the conveyance, although some of them are, on their face, inconsistent with the idea of a trust, they do not overcome the force of admissions. And, first, as to the admissions, they are proved by.-the positive
The incipient steps to this transaction are disclosed
Following these conversations with Rachel Hall and Maloney, was the conversation with Margaret Hall, John’s step-mother, three or four years' after Livingston had held the farms. Taking an occasion to quiet some dissatisfaction on her part, at his holding the farms, Livingston says to her, assuringly, “Mother Hall, you have been very “much vexed with me about these matters, — 1 just took it
In 1864, from some cause, it matters not what,L ivingston’s connection with these farms became a topic of some special interest in the neighborhood. Three conversations on the subject within that year appear in evidence ; those with Johnson, Bradley and Parsons,— Johnson being the tenant of the Marsh farm, while talking with Livingston, as he says, one Sunday about the farm, asked him, “ how long he had this land in hand,” a question evidently suggested by some general neighborhood understanding than Livingston held these lands in trust. The reply was, “seven years and then the land went back to John Andrew Hall,” not as we must understand Livingston that his estate was so limited by the deeds, but according to the purport of the conversations with Maloney and Mrs. Hall, in seven years the lands, it was supposed could be cleared of debts, and the trust being then fulfilled, they would beeome John’s again. Another witness, Bradley, proposed to rent the farm if Livingston would build a new house ; which Livingston declined on the ground of his inability; adding also, “ that at the end of seven years he expected “it (the farm) to go back to John Andrew Hall, and he “wasn’t going to build for another man. The meaning of “this reply is too obvious to admit of the construction “ attempted in argument, to be based upon the word “expected,” viz; that he, the absolute owner might voluntarily restore the lands to John, should he behave himself well. Livingston’s declarations to Parsons in the
But to overcome the force of these admissions, it was insisted that certain transactions to which Hall was a party, were wholly incompatible with the alleged trust, and demonstrated that the conveyance was made to Livingston as a purchaser, such as the lease of one of the farms to Hall as a tenant in 1865; the written acknowledgement of sundry payments by Livingston, on account of the farms as property bought by Livingston — and the final acknowledgment of payments in full for the purchase. But these transactions, I feel obliged to say, find, in circumstances disclosed by the proof, an explanation not inconsistent with Livingston’s admissions. That explanation is that Hall took part in them ignorant of their real nature, and confiding in Livingston that they were only carrying out the trust. Hall was not a non compos; not even a fool in the usual sense. He could buy and bargain and sell in the ordinary course of his business as a farmer. The defendant’s evidence proves this degree 0/ capacity, no more. But his weakness was an easy going temper, disposed to take for granted what should be scrutinized, a confidence overweening, where given at all, and these traits, together with his extreme ignorance and unfamiliarity with legal forms, made him easy to be imposed upon in such business. The proof of these characteristics is abundant.
Passing by the testimony of his relatives, Margaret Hall, William Hall, Rachel Hall and Draper Hall — othqf witnesses not connected with him, and disinterested, apply to him these terms, “he is yielding and obliging,”— “he is very ignorant,” — “he is very confiding,” — “those whom he considers his friends, can do anything with him.” So say Johnson, Jester, Cullen, Polk, Parsons,
The consideration's the defendant Livingston,alleges, was $2400; no part of this to be paid upon the execution of the deeds, but $1,800 to be either applied — the liens— the residue, to wit; $600 was to be either applied in discharge of debts which were not liens as might be approved by Hall, or paid to Hall himself, as he should thereafter direct ; so says Livingston in his answer. Yet, for the due application of this consideration, amounting to $2400, being Hall’s whole worldly estate,- no security was required, no bond, no written engagement or evidence of Livingston’s obligation, riot even parol evidence of it. The same overweening confidence and inattention marks the other transaction of Hall, relied on by the defense — the lease, and the two receipts. The parties go together before some one capable of drawing a legal instrument. Every thing is done upon Livingston’s suggestion, — the nature of the paper drawn, and to some extent, the ‘language, is at his dictation. Hall’s whole share in the transaction is, simply, assent; his action is wholly formal and passive. He makes no-suggestion, he asks no questions; does or says nothing to indicate that he really understood the nature and legal operation of the papers signed. His utter inattention to self protec
The effect of the evidence as to this lease then, is about this: As an illustration of the original transaction and proof of a purchase from the beginning, its force is so far weakened by the long interval after which it was taken, that it does not overcome the proof or the effect of Livingston’s admissions to the contrary. Then, again, what would have been a natural solution of the taking of a lease at a date long after the conveyance, viz: that the trust was abandoned is precluded by the answer. Now, what was the true explanation of this transaction, it is not material to inquire. I express no opinion about it and have sought to form none.
Some evidence was adduced by the defendants, of declarations made by Hall, inconsistent with the existence of the alleged trust. It consists of the testimony of White and Augustus Stutzer. White’s testimony has been successfully impeached, and, under the rule of evidence, cannot be considered. As to young Stutzer, I do not question his veracity or even his accuracy. For supposing it to be true that Hall, understanding that the defendant, Stutzer, was in treaty with Livingston for some of this property, said that “he would make a good thing to buy it; that he (Hall) had owned (or had tilled) it and knew it was good land,” still the force of such a declaration, by a party so ignorant and inconsiderate, weighs little, as against the oft-repeated and unequivocal counter declarations of Livingston. It must be set down as one of not a few incongruities presented between the conduct of each of these parties, and the theory of his case. On the whole, my conclusion is, that the transactions between these parties, are not, on their face, such
We now reach the special defense set up for Stutzer, which is that, holding the legal title by purchase from Livingston, for a valuable consideration paid, he cannot be affected by a prior equity without notice, and that he had no notice of the trusts, supposing there were any. That he purchased for a valuable consideration is not in dispute : but he is sought to be affected with notice, in having neglected to act upon the cautions received from William Hall and Jester, which it is insisted should have put him upon inquiry of John Andrew Hall himself.
Let us turn to the evidence upon this point. And first, as to the caution given by William Hall. Early in March, 1866, about three weeks before Stutzer’s purchase, he called, in company with Joseph S. Lofland, upon William Hall, at Hall’s residence. The object of this call was to ascertain if William Hall had any claim against the property, and particularly whether William Hall had any claim of title under the will of Winlock Hall, the grandfather of John Andrew Hall, under whom John Andrew took his title. Of the two witnesses examined to this interview, only William Hall undertakes to detail
The testimony of Lofland does not vary materially from William Hall’s statement, except that he does not remember any suggestion by Hall, that Livingston held these lands in trust for John A. Hall, or that any question
We are compelled to consider the effect of these cautions, for such is the proof relied on to affect Strutzer with notice of the trust.
To be sufficient prior notice of the trust, it must be found to satisfy a rule well settled, both in the courts of England and this country, which is this ; — It is upon the ground of mala fides, and not of mere want of caution, that the purchaser for value is affected with a prior claim, and, therefore, the notice to affect him must be more than would excite the suspicion of a cautious, and wary purchaser. It must have been so clear and undoubted, with respect to the existence of the prior right, as to make
The leading authorities, among a great number on this point, are two decisions of Lord Hardwicke taken together, Hine vs. Dodd, 2 Atk., 275 ; and Le Neve vs. Le Neve, 3 Atk., 646; Jolland vs. Stainbridge, 3 Ves. Jr., 478 ; and the late and interesting case of Jones vs. Smith, 1 Hare, 43, (23 Eng. Ch.); 1 Phillips, 244, (19 Eng. Ch). This case, decided as late as 1843, presents so elaborate a review of the prior English decisions, and, in its facts, so well illustrates the question, that we may well advert to it. The defendant, Smith, being about to advance money upon a mortgage of the husband’s estate, inquired of the mortgagor and his wife whether any settlement had been made upon their marriage, and was informed that a settlement had been made of the wife’s fortune only, and that it did' not include mortgaged property, although, in fact, it did, and limited' to the husband only a life estate with remainders in tail. Confiding in this representation, the defendant did not require the production of the settlement before advancing the money. After the husband’s death,the bill was filed against the mortgagee in possession by the tenant in tail, under the settlement. It was conceded that the mortgagee had acted bona fide, but he was sought to be charged for his want of caution in resting satisfied with the statement of the parties, instead of requiring the production of the settlement for his inspection. The case underwent two arguments by very eminent counsel, among whom were Swanston, Turner, and Bacon, before Sir James Wigram, Vice Chancellor, and the other on appeal before Lord Lyndhurst,
Another apt illustration o’f the rule is the case cited from 8 N. H., 244, Rogers vs. Jones, where a deed, having been executed and delivered, was handed back to th'e grantee to have it recorded. Instead of having it recorded, the vendor sold to another person, shewing him the deed, but stating that it had never been delivered. The purchaser was held not charged for his omission to inquire further. And so the same doctrine, that the purchaser is chargeable for mala Jides and not mere incaution,has been uniformly held as 'against claims not of record, in this country under examinations of the question by the ablest Judges ; by Chancellor Kent, in Dey vs. Dunham, 2 Johns. Ch. Rep., 182 ; by C. J. Gibson, in Remo vs. Swope, 2 Watts, 78 ; by C. J. Ruffin, in Fleming vs. Burgin, 2 Iredell's Eq., 584 ; and by Judge Story, in Flagg vs. Mann, 2 Sumn., 486. See also 4 Kent, (171) ; Sugden on Vendors, Ch., 21, Sec. 5, par,, 40 ; Cruise on Real Prop., Title Deed, Ch. 29, Sec., 20, &c., and note ; 2' White and Tudor, Leading cases in Equity 144, &c.
It may be observed that the cases, in which this rule has been discussed and settled, have chiefly arisen under registration acts, by which a prior unregistered deed is
Now, although his conduct may be attributed to his mental facility before commented on, that is, a considera-, tion to affect only Livingston, the man who dealt with him, and not third persons. There is another consideration applicable alike to all cases in which a purchaser is sought to be affected by a prior right, whether the recording acts, or otherwise, and leading to the same conclusion, viz : that the notice must impeach the bona fides and not the mere caution of the purchaser. It is that sound policy forbids that a 'title bought in good faith, and paid for, should be hazarded upon the question whether due diligence has been exercised in looking after prior latent rights, such as are not disclosed, either by the record, or by the deeds under which the purchaser takes his title. Such a question is altogether too uncertain to be a safe judicial test of the validity of the titles to real estate.
With respect to authority on this point, I find none which discriminates between the notice required to affect a purchaser in cases under the registry acts and in other cases. As might be expected, the cases are few in which the prior claim is a mere equity, not capable of being registered ; but in such as have occured, a rule of notice no less strict has been applied. Such was the early case of
We may now return to' the testimony relied on to affect Stutzer with notice. The question will be, were the suspicions expressed by William Hall and Jester, sufficient notice of this trust to render it an act of bad faith in Stutzer to proceed without further inquiry to purchase the land and hold it against Hall ? I think not. Prior, and up to the conversation with William Hall, the bona fides and diligence of Stutzer is unquestionable. He had, upon two visits .to Dover, with the aid of experienced counsel, examined the title papers and records, which is the mode legally prescribed and usually relied on for investigating title; and against such defects and incumbrances as this examination disclosed, he had studiously guarded himself; first by requiring Livingston’s bond of indemnity against the liens; then as to the risk of further issue of Draper Hall, John Andrew’s fathér, which issue, if any, he was advised would be let into a share with John
Then with respect to the conversation between Stutzer and Jester, the question put by Jester, whether he, Stutzer, “knew whose land he was trading for,” expressed only vague and indefinite suspicion, pointing to nothing, and in itself carrying no notice. Such a hint might affect a purchaser where, and only where, his conduct, on receiving it, evinced that he had a suspicion of the truth, and willfully evaded further information. This would affect him with mala fides within one of the principles of implied or constructive notice, so clearly stated by Vice Chancellor Wigram, in Jones vs. Smith, 1 Hare, 55 (23 Eng. Chan. Rep.). Now Stutzer’s reply, that he did know whose land he was trading for, that he “generally “knew what he was about before he jumped into it,” turning around and leaving, might, taken alone, bear this construction ; but construed by all the circumstances, his whole conduct throughout the negotiation, his abrupt treatment of Jester’s suspicion more naturally expressed an over- confidence in the title he was bargaining for; a confidence inspired by the removal of all objections ap
On the whole, the testimony relied on fails to impeach the bona Jides of Stutzer, shewing, at most, a want of extreme caution which is not sufficient to deprive him of his legal advantage against Hall, who stands affected by far more serious laches in having neglected to have the trust declared in his deed, not to speak of his omission, after knowledge of the negotiation which is proved, to caution Stutzer, his whole action, on the contrary, so far as it went, tending to allay suspicion of any claim on his part.
This view of the conclusiveness of the testimony is well supported by authority. In Wildgrove vs. Wayland, an early case cited in the text of Sir Edward Sudgen, one man came to a person about to buy a house and told him to take heed how he bought it, for the vendor had nothing in it but upon trust for A. ; and another person came to him and told him it was not so, for the vendor was seized of the land absolutely. The first proved to be correct; yet the purchaser was held not to have notice. A later, perhaps a stronger case, was Joyland vs. Stainbridge, 3 Ves. Jr., 478. It was a bill to set aside a long lease executed by the complainant’s deceased father and which, by assignment, had come to the defendant. The complainant’s claim was as issue in tail under a will of his grandfather, which will had not been registered so long as to give the assignee of the lease, the defendant, constructive notice. The bill charged actual notiee to the defendant before the purchaser of the lease, upon proof such as this ; that the complainant’s mother had, on more than one occasion, before the defendant’s purchase, cautioned him “ not to have anything to do with the estate ;
Some cases were cited for the complainant to shew the sufficiency of notice in this case. In Jackson vs. Cadwell, 1 Cow., 625, the defendant, at Sheriffs sale, under a judgment which had been paid, but not satisfied of record. He was held not to be a bona fide purchaser, partly because he was not proved to have paid any purchase money, and partly because he had been informed, on the day prior to the sale, that Edward C. Sanders (one of the adverse parties) “laid some claim to the premises” and had taken an indemnity against the claim. The taking of an indemnity was itself a clear ground upon which to affect the purchaser, and was the circumstance which controlled the decision. Savage, C. J., recognizes the authority of Jackson vs. Given, in Pearson and wife vs. Daniel et al., 2 Dev. and Bat, 360, a purchaser of land against which the bill sought to establish a trust in favor of Pearson and wife, had been informed before the purchase by a third person, that “the Pearsons did have a claim to the land,
“ Having chosen,” saysGarton J., “to speculate upon the title after receiving this information, the defendant must abide the result.” The ground on which the defendant was charged was mala fides, and, so far, the case is in harmony with the established rule ; whether the proof was sufficient to shew mala Jides might be doubted, were it not that, not merely the bare words of notice or information, but the whole prior conduct in all the circumstances of the case enter materially into the question of mala fides. The general impression of the case in Devereux & Battle was suspicious, and it was a fact noted by the Judge that there was no proof that this purchaser had actually paid anything. In Blake vs. Hayward, 1 Bailey, 208, the purchase, though for value, was affected by a degree in equity, for the payment of money, against the vendor, and such claim was held, under South Carolina Statute, to be a lien like a judgment.
In the case of Polk vs. Gallant, 2 Dev. & Bat., 395, the defendant was a purchaser, at Sheriff's sale,of an equity, and not of the legal title, and it was held that even if he had taken the latter, and much more if only of the former, it would have been subject to all equities against the defendant in the execution.
None of these cases, therefore, will answer the purpose far which they were cited.
The entire passage from Gilbert reads thus :—
“ It seems, at common law, a use might have been raised by word, upon a “ conveyance, that passed the possession by some solemn act, as by a feoffment; “ but when there was no such act, then, it seems, that a deed declaratory of “ the uses was necessary; for as a feoffment which passed the estate might be “ made at common law by parol, so, by the same reason, might the uses of the “ estate be declared by parol, but where a deed was requisite for the passing “of the estate 'itself, it seems, it was requisite for the declaration of uses, as “ upon a grant of a rent or the like. So, it seems, a man could not covenant “ to stand seised to a use without a deed, there being no solemn act; but yet a f‘ bargain and sale by parol has raised a use without, and it has been held to “ do so, since the Statute, in cities exempted out of the Statute. It has been “ held that if a fine be levied of a rent, no use can be limited of it without “ deed; but now by 29 Car. II. C. 3, all declarations of trust, other than such “ as arise by implication of law, are to be in writing, and signed by the party “who is, by law, enabled to declare such trust, or else it must be by his last “ will in writing. 2 Roll. 788 ; Collard vs. Collard, Pop. 49 ; Moor, 688 ; 2 “ Inst. 675; Jones vs. Morley, Holt, 321; Dyer, 229 a.”
It will be observed that, in this passage,the question, under which forms of conveyance uses might, and under which they might not, be declared by parol, is governed by a distinction between those conveyances which, at the period, referred to might be made by parol, and those which required a deed in order to pass the estate upon which the use was to be raised. Says the learned Ch. Baron, “ as a feoffment which passed the estate might be made at common law “ by parol, so by the same reason might the uses of the estate be declared by “ parol, but where a deed was requisite for the passage of the estate itself, it “ seems, it was requisite for the declaration of uses. ” This distinction will be found fully to harmonize all the early cases, and must be taken to have been the one applied by the Courts to the several forms of conveyance. Thus, with respect to a feoffment, the primary mode of assurance, inasmuch as it might be made without a deed, so the uses of the estate conveyed might be declared without a deed, though a written declaration of the uses came frequently to at.
These are the two instances put in the passage cited from Gilbert, and none others can be found in the early cases, in which, prior to the Statute of Frauds, 29 Car. II., parol evidence, was held inadmissible to establish either a use on lands before the Statute of Uses or trust, since that Statute; — trusts, since the Statute of Uses, having succeeded to all the incidents of uses before that Statute.
A further remark is necessary, with respect to bargains and sales, and the effect of their being required to be in writing, under 27 IIe7i., VIII. C., 16. It js not to be inferred that the effect of that Statute was to preclude parol trusts after the legal estate in lands came to be conveyed by bargain and sale.